If you want the convenience of using a credit card, but don’t want to deal with interest and fees perhaps you should consider prepaid cards. These cards work very much a credit card when you use them at the store, they are accepted at the same places, etc. But it is important to remember there is no credit line. If you don’t have money on the card before you use it, you can’t use it. There are a couple effects that you should consider.
Building your credit. If you have read any advice columns about building your credit you no doubt know that having some revolving credit (such as a credit card) with regular on time payments has a positive impact on your report. It may be tempting to think that you can accomplish the same with prepaid cards, but this is not the case. Because you are not borrowing money, you are not using your credit and therefore not impacting your score. If your goal is to avoid interest and still build credit, you must carefully utilize the grace period on a credit card instead. Most cards have 30 days to be paid in full before any interest is applied. But your payments still show up on your report, you are still using credit even if you aren’t paying interest!
So, it depends on what your goals are. If you are just looking for a way to spend money conveniently at the store, and you aren’t concerned about building up your credit score, prepaid cards might work for you. If you want to avoid payments and build your score, you’ll want to pay off a credit card each month. One you pay in advance, the other you pay immediately after.